In the past banks were utilized to transfer and deposit notes from. ATMs introduced debit and credit cards, and electronic payments quickly followed, eliminating the need for people to visit ATMs or carry cash.
The banking industry is one of the major industries that is affected by each new wave of digitization. What if banking introduces metaverse technology and it will become the next big change?
Customer reps avatars could be used to virtually enter a bank branch and deposit or withdraw money digitally from the vault. Imagine the bank provides options to pay using dollars from savings accounts or digital currencies issued by the bank, or even through tokens from a digital wallet like Ethereum. The concept of banking in the metaverse holds the potential to turn these theoretical possibilities into reality.
This article will explore various aspects such as the business potential of metaverse in banking, the advantages of metaverse banking, the banks that have already ventured into this space, and how banks should strategize their entry into the metaverse.
The banking industry has reached the fourth phase of evolution, where NFTs and cryptos are taking the lead. Meanwhile, a few banking institutions have moved into the fifth stage – the metaverse stage.
Let’s explore the phases of the evolution of Metaverse Bank.
Central banks ruled a two-tiered banking phase that relied on one-on-one interactions with customers in a physical space. This stage was characterized by being paper-based and heavily manual, with a lack of financial product customizations and personalization.
Over the past three to five years, the banking industry has actively allowed itself to connect with third-party services through APIs, resulting in the emergence of several neo-banks and cross-industry marketplace offerings such as health services, automotive sales, energy services, and more.
NFTs and cryptocurrencies have played a significant role in creating a new secure, borderless, and fast banking economy with the advent of Web3. They have added entirely new assets to the financial market, such as art, gaming, and real estate.
Various industries, including banking, have focused on providing virtual banking experiences, giving significant attention to the metaverse over the past year or two. The industry is ready for a significant revolution.
Morgan Stanley and Goldman Sachs predict that the metaverse domain will reach a valuation of up to $8 trillion in the near future, and they believe that banks will play a crucial role in this market. By leveraging technologies such as AR/VR and cryptocurrencies, banks can envision new ways to engage with their customers and provide innovative offerings.
The traditional banking industry can benefit from banking in the metaverse in a range of ways, which not only impact customer experience but also open up new financing models.
A number of banks have begun training their employees on VR due to 47% of bankers supporting AR/VR as an alternative transactions channel by 2030. Bank of America has developed a VR training program simulating real customer scenarios for its 50,000 employees. Additionally, BNP Paribas has launched a VR app that allows users to perform banking transactions using VR.
Enabling 3D employee and customer experiences can enable banks to offer elevated services and connect with a new target audience, establishing their prominence. To summarize, using 3D can benefit banks in the following ways.
Enable customers to view their balance, pay bills, and make transfers through AR/VR platforms.
Deliver an immersive learning experience by simulating customer scenarios and onboard remote workers while creating a sense of community.
In the metaverse, banking institutions have the opportunity to reassess their interactions with customers and identify ways to provide empathetic service through avatars. The impact of the metaverse on financial services can be viewed through an experience-focused lens, with a two-fold answer.
In the metaverse, banks can provide high-touch service to customers by offering virtual glimpses into their portfolios and expense revenues, conducting virtual financial planning sessions, and making well-strategized product recommendations.
Banks can create a virtual experience by replicating events such as cash withdrawals at ATMs, designing branch placement and layout, and more, to help customers feel connected with the bank.
Innovative banking products can tap into the metaverse’s numerous opportunities for banking.
Entering the metaverse space can be very challenging from a bank’s perspective as it requires complete virtualization, which is a massively unexplored area. Banking institutions need to plan and set milestone goals to approach metaverse technology in banking, even though it has been comparatively easier on finance in the metaverse.
At BizBrolly, we often recommend a milestone-based approach to financial institutions for metaverse development services. For banks, we advise focusing on existing metaverses to find potential customers, provide lending and payment services, and onboard them through digital wallets as part of their short-term strategy.
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